Evidence of meeting #16 for Public Accounts in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was information.
A video is available from Parliament.
4:45 p.m.
NDP
The Chair NDP David Christopherson
You can't pick a better note to take your bow out from this committee.
Thank you so much, Mr. Simms.
Now going back to Mr. Albas, you have the floor, sir.
4:45 p.m.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Thank you, Mr. Chair.
I just want to thank all of our witnesses here today. Specifically I'm going to direct my first question to Assistant Auditor General McMahon and perhaps Director Miller, whoever can best answer.
First of all, I understand through the report that there were some legitimate concerns raised about priority-setting at the onset of the list becoming known and also about some aspects of it. Some of the criticism I have heard from the opposition is that CRA didn't treat this kind of behaviour with the seriousness...or had properly committed to resourcing.
When I read through this, particularly since the development of such a substantive list had never been seen before, I don't think this kind of audit has actually been undertaken by a previous government. Would you agree that CRA did take this most seriously and diligently set out to see this through?
4:45 p.m.
Assistant Auditor General, Office of the Auditor General of Canada
We did conclude that the agency conducted the compliance actions adequately and they followed their own procedures. In our recommendations, however, we do identify some areas for improvement such as setting timelines, updating their procedures, and training their staff.
I don't know if Heather wants to add anything more on our conclusion, but that's what we looked at to see if they were following their own procedures and taking those lessons learned and updating their procedures for future lists.
4:45 p.m.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Director Jelmini, you mentioned to Mr. Simms that those timelines are now being done if a similar occasion or similar occurrence was to happen. Is that correct?
4:45 p.m.
Director, Offshore Compliance Division, Canada Revenue Agency
That's correct. The timelines have been changed.
4:45 p.m.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Mr. Montroy, your correct title is assistant commissioner, correct?
4:45 p.m.
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
Yes.
4:45 p.m.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Well, it's nice to have you here today, sir.
It's my understanding you were involved in some of these TIEAs, tax information exchange agreements. When this list first materialized, did we have a TIEA with Liechtenstein?
4:45 p.m.
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
Thank you, Mr. Chair.
The TIEA with Liechtenstein was just recently signed. In fact, in 2007, when we received the Liechtenstein list, there were no TIEAs signed at that point.
4:45 p.m.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
The environment has changed radically. I guess, Mr. Chair, what I'm saying is that by going through this process particularly when you're dealing with international operations, it can be very difficult if you only can see one side of the equation. So having these TIEAs, I imagine, Mr. Montroy, will make the work of CRA more efficient and more focused. Is that correct?
4:45 p.m.
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
Yes, that is correct.
4:45 p.m.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
One thing I wanted to raise, Mr. Chair, is that from reading the report, and I give all credit to the Auditor General that it really reaffirms the fact in my mind, the old sentiment, that there are only two things you can count on in life, death and taxes—obviously, focusing more on the tax side. It just seemed to me that the particular lead—I'm going to call it a lead—that you received from this informant was absolutely critical to this whole process being opened up. Is that correct?
4:50 p.m.
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
At that time, yes, that is correct.
4:50 p.m.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
When Assistant Auditor General McMahon opened up her statement, she said other lists had been received since then. Is that correct? I'm not sure if it's the same quality or scope, but other lists similar to this may have come forward. Is that correct?
4:50 p.m.
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
That is correct. We work with our treaty partners. We have actually quite an extensive network of countries that we work with. So yes, we occasionally get lists from our treaty partners.
4:50 p.m.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
I think it's particularly important because most people are familiar with the idea of an informant and how important that is to cases like these. I think it's important for us to encourage people who may have similar information to come forward.
Director Jelmini, your suggestion that there are ways for people to get in touch I think is important, but in the Auditor General's report it talks about something called “informer privilege”.
Can either one of you just comment on what that is? I think it's important, Mr. Chair, that people at home who may be engaging in this kind of evasion or aggressive avoidance know that there are protections and not just incentives, which Mr. Simms had mentioned earlier. There are protections that can be offered for people when they bring forward information. What's important to CRA is the functioning.
4:50 p.m.
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
Thank you, Mr. Chair.
Briefly, in our tax informant program we have a number of measures in place to protect the confidentiality. It's pretty much a well-established principle in international law that you try to protect the identity of the informant for security reasons, so we have measures in place to protect the identity of the informant.
4:50 p.m.
NDP
The Chair NDP David Christopherson
Very good, thank you.
Moving right along, Monsieur Giguère, you have the floor once again, sir.
4:50 p.m.
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
For the benefit of the public, I would like to come back to the last bit of information presented by Mr. Albas.
Tax avoidance by way of abusive tax planning is not illegal; tax evasion is. Tax planning, even if it is very abusive, which then leads to tax avoidance, is legal. That is why you cannot prosecute a person for tax avoidance. What the law does not prohibit is permitted. Therefore, the information presented by Mr. Albas was not appropriate. That can be confirmed by Revenue Canada or the Office of the Auditor General.
My question is about the lists. I would like to know what is the evidentiary value or weight of evidence produced by a whistleblower. A list can very well contain all kinds of numbered data, but how would the agency alone be able to give enough evidentiary weight to the list so that it may lead to an assessment and a penalty, including the payment of interest, as the case may be?
4:50 p.m.
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
In cases of straightforward civil assessments, it's the balance of evidence which applies. In that situation, there are several ways we can use to get the information we need. There would be information in the country, banking information which can be obtained in Canada and, if necessary, under tax conventions with other countries.
However, the situation is very different in the case of tax avoidance. You have to prove that beyond a reasonable doubt, and that is much more difficult. The balance of evidence would then become much more significant. Furthermore, under Canadian law, people have the right to protection. In cases where we would want to force a taxpayer to provide us with information, our power changes drastically in cases of tax avoidance. There would be criminal consequences, as opposed to just having a civil assessment.
4:50 p.m.
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
There are no criminal charges in cases of tax avoidance. The Supreme Court ruled on that matter. A person taking legal measures so as to pay less tax is not committing a crime.
4:50 p.m.
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
If I may, I will answer that question in English. I apologize, but it is because I mostly work in English.
There's a difference between tax evasion and tax avoidance. Tax avoidance is perfectly legal, and as the honourable member mentioned a few minutes ago, what is not prohibited is permitted. Tax avoidance is something that we see often. It is playing on the margins of the law, but it is permitted. Tax evasion is a very different story and it is criminal in nature.
4:55 p.m.
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
That's exactly what I said.
As for the evidence, if you are given a list of names, but the list was stolen from a foreign banking institution, do you have the right to use the list? In Liechtenstein, the employees from the bank were prosecuted. In fact, they are still being prosecuted in Europe. They are even wanted by INTERPOL.
Do you have any measures which would protect your witnesses, who might even be considered as being political refugees?